What Happened?
Shares of plant-based protein company Beyond Meat (NASDAQ: BYND) fell 7.8% in the afternoon session after it announced the final results of a debt exchange offer that included the potential issuance of a large number of new common shares.
The company finalized a deal to swap its 0% Convertible Senior Notes due in 2027 for new 7.00% convertible notes due in 2030 and up to 326.2 million new shares of common stock. The plan to issue such a large number of new shares likely concerned investors because it could significantly dilute the ownership value for existing shareholders. This financial restructuring came at a time when the company's performance had already been struggling. In a previous quarter, the company's CEO, Ethan Brown, admitted disappointment with the results as sales had fallen nearly 20% year over year, and adjusted earnings were negative.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Beyond Meat? Access our full analysis report here.
What Is The Market Telling Us
Beyond Meat’s shares are extremely volatile and have had 63 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 14.9% on the news that the stock's negative momentum continued as the company disclosed significant equity dilution from a debt restructuring and warned of a future impairment charge. The plant-based meat maker announced the issuance of 316 million new shares against a previous base of 77 million, a move that substantially diluted the value of existing stock. This restructuring prompted Mizuho to lower its price target on the stock to $1.50 from $2.00. Adding to the negative news, Beyond Meat also warned in a filing of a coming “material” non-cash impairment charge related to certain long-lived assets. The company also provided preliminary results for its third quarter, expecting revenue of about $70 million with a gross margin between 10% and 11%.
Beyond Meat is down 52.3% since the beginning of the year, and at $1.83 per share, it is trading 72.2% below its 52-week high of $6.58 from November 2024. Investors who bought $1,000 worth of Beyond Meat’s shares 5 years ago would now be looking at an investment worth $12.08.
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